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Aussie Stalls into Key Resistance Level

The Australian Dollar is cooling a little over early European trading on Thursday following a fresh push higher yesterday. Softer US inflation and weak US retail sales data helped drive USD lower on Wednesday, allowing the Aussie room to push higher.  However, weaker-than-forecast Aussie labour market data overnight fuelled selling interest which has continued throughout the first half of the European session on Thursday.
 

Aussie Unemployment Rises

The Aussie unemployment rate was seen rising to 4.1% from 3.9% last month, above expectations for an unchanged reading. The outlook for the Aussie has become more mixed over recent weeks. While the RBA has highlighted downside economic risks, leading traders to anticipate easing in coming months, stick inflation data has created obvious headwinds to this view. Indeed, some players have speculated that the RB might be forced into having to hike rates further, or at the very least hold for longer, if inflation doesn’t start to cool again soon.
 

USD On Watch

For now, USD will likely be the main driver given the sharp move we saw yesterday. If the USD sell off starts to gather pace this should see help drive AUD higher here. However, if we see a recovery in the Dollar, AUDUSD has room to soften near-term.
 

Technical Views

AUDUSD

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The rally in the Aussie has seen the pair trading back up to test the .6681 resistance level. This is a key area for the pair and a break above here will put the focus on a test of .6857 next, in line with bullish momentum studies readings. To the downside, .6520 will be key support to watch. 

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